No Hardware Requirements

Crest™ is a web-based application, so performs its highly accurate stress tests without the need to purchase additional hardware. This makes it easy to implement and you’ll spend less time and energy gathering necessary data. Crest™ obtains your institution’s electronic loan data from the standard ALERT file readily available from every data system (the same file you give to your regulators). Simply import the file into our loan stress testing tool without any complicated data feeds. This eliminates costly and manually intensive data maintenance processes and keeps the information up-to-date and accurate.

Simplified Data Requirements

Crest™ is streamlined to provide more accurate stress test results with fewer data requirements than any other stress testing option available, overcoming the ongoing data-gathering challenge faced by all financial institutions. Its the only CRE loan stress testing tool that gives banks an automated framework that can effectively eliminate burdensome data management requirements and produce a baseline stress test within a single workday.

Crest™ allows you to choose the most efficient stress testing method, customize your stress test factors and determine your exposure. We’ll work with you to make sure you have the optimal system in place for your specific customer base.

 

Crest™ Reporting

Crest’s™ reporting features provide multiple benefits to its users. The reports include user-friendly results accompanied by step-by-step guidance, and provide valuable information to help financial institutions meet and exceed expectations.

 

Capital & Earnings

The goal of the loan stress testing process involves calculating the effect a hypothetical scenario will have on your capital base and earnings should the stress scenarios actually transpire. These findings are used to enhance risk management practices at your financial institutions so you can be confident that your reserves accurately reflect and balance the risk in your CRE loan portfolio.

  • Protect Your Capital Position Despite the recent economic turbulence, many banks that place a proactive importance on stress testing have been able to stay well-capitalized. With Crest’s™ ability to project the impact on capital and earnings, your bank will be able to get in front of the risk so that you can control your capital position.
  • Export to Excel The Capital & Earnings worksheet will perform a separate analysis for past portfolios (ASC450) and loans that are impaired. After performing this analysis and recalculating the Tier One Ratio and ROAA, the worksheet can group your loans by property type, allowing you to immediately focus on higher risk segments. The worksheet will detail every loan contained in the stress test and highlight those that failed, giving you actionable results that enable you to immediately begin to strengthen individual credits. The worksheet also allows you to further customize charts when preparing management reports.
 

Board & Management Reports

The many benefits of an accurate loan stress test are useless without a convenient way to present them. With Crest,™ results of the stress test load directly into a printable PDF document which contains easy-to-read charts and graphs. These color coded graphs are grouped by category, helping you determine the results of your CRE loan portfolio’s DCSR and LTV ranges, among other benefits. These easy-to-digest tools are helpful when presenting to board members and auditors, letting them know exactly what is going on with your portfolio.

 

Crest™ Analytics

Crest™ performs a number of analytical tests to empower financial institutions to defend themselves by identifying and avoiding potential weaknesses in advance.

These include:

 

What If Analysis

Banker’s Toolbox “What if” Analysis helps answer your hypothetical ‘what ifs’ by turning them into instant hypothetical calculations.

  • Instant Gratification in So Many Ways. What if vacancy rates increase? Would your bank’s retail CRE loans start to default? What if property values go down? Are your loan-to-value ratios at risk of being upside down? With a click of a mouse in Crest™, your hypothetical ‘what if’s become instant hypothetical calculations.
  • Instantly Perform a Reverse Stress Test. Crest™ can tell you what factors will prevent the property from adequately cash flowing, or what could cause the loan to be under collateralized. Current Crest™ customers perform this analysis prior to loan renewal and include the documentation in the package that goes to the loan committee and the board of directors.
  • Instant Stress Testing at Every Level. Whether you are viewing a single loan, a particular segment of loans, or your entire portfolio you have the power to apply an instant ‘what if’ analysis—a forward-looking loan stress test made up of hypothetical changes to variables such as income, interest rate, and property value. Simply adjust the variables as you see fit, then watch as the ‘what if’ analysis immediately reflects how the loan quality would change in that hypothetical environment.
  • You Can Create Default Scenarios. If you have a certain stress level or scenario that you would like to use regularly in the ‘what if’ analysis, you can set up default scenarios that you can quickly apply instead of individually adjusting each variable every time. For example, you could create sets of variable adjustments that represent “mild” or “severe” conditions so that you have two default scenarios to use while stress testing.
 

Concentration Analysis

Using Crest’s™ virtually unlimited segmentation abilities, financial institutions can easily segment by characteristics such as business type, branch, zip code, loan officer, collateral type, interest rate, NAICS code and any other custom factor you choose. When you look at your portfolio from multiple angles, you’ll have enhanced visibility of your concentration segments so that you can get ahead of potential risk.

  • Customizable CRE concentrations are typically thought of in terms of revealing risk, but it’s even more important for a bank to break down and identify the most profitable type of CRE loan. Finding this segment is crucial to sustain profitability, fund the loan loss reserve, augment the capital base and ensure the future viability of your bank.
  • Unlimited Segmentation Possibilities To uncover these hidden risky credit concentrations, you need a flexible and scalable way to split your portfolio into segments by various factors.
  • Your Data is Safe and Sound In order to ensure the utmost security and long-term stability of your stress testing program, Banker’s Toolbox has partnered with Computer Services, Inc. (CSI), currently the largest managed IT and cloud computing services provider for U.S. community financial institutions. CSI undergoes multiple independent reviews annually, including a SAS-70 Type II audit, Cisco ISO 27001 audit and several others. CSI maintains strict oversight of its people, process and technology to ensure confidentiality, integrity and availability of information in accordance with FFIEC guidelines. For due diligence on CSI, please click here to visit their website.

Banker’s Toolbox provides the most realistic high-level stress test available. You need a stress test that gives you the ability to spot potential trouble beyond the horizon so you can proactively take action. Due to vague assumptions, most portfolio-wide stress test results are not practical for shaping important decisions about the direction of your CRE loan portfolio. With Crest’s™ multi-dimensional stress testing functionality you’ll see results that are closer to reality. The results are adjusted for the unique environmental and economic factors surrounding your institution.

  • Create Your Own Stress Factors. The OCC Handbook states that, “… when exposures in a pool are sensitive to the same economic, financial, or business development, that sensitivity, if triggered, may cause the sum of the transactions to perform as if it were a single, large exposure.” Crest™ can combat this by giving you the ability to create your own loan stress testing factors based on your local market conditions, CRE concentration analysis and your perception of your risk portfolio. So you can create one set of stress factors or ten! You can also revise your factors at any time based on your changing needs.
  • Combine Stress Factors for a Complete Picture. Our CRE loan portfolio management system gives you the ability to perform stress testing with one or more stress factors. For example, you can perform a stress test for rising interest rates only if needed. Or, if you want to combine multiple stress testing scenarios at once, such as simultaneously testing rising interest rates and falling collateral value, you can do that as well. You have the ability to include as many factors as you want and edit them at any time.
  • Not All Stress is Created Equal. If you have been proactive in segmenting your portfolio to identify your biggest concentrations you’ve probably also realized that in reality, external factors do not affect your entire portfolio to the same degree. Crest™ allows you to apply different sets of stress factors to different segments within the same portfolio-wide stress test calculation. This allows for a truly accurate calculation.